On September 28, the U.S. Securities and Exchange Commission (SEC) announced a $1.8 million whistleblower award, issued to “a company outsider, who expeditiously reported significant information to the Commission about ongoing securities law violations.” The award is the 100th whistleblower award granted in the history of the SEC Whistleblower Program.
“Today’s award demonstrates the success of the program and the important role that company outsiders can play in halting ongoing violations,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “While many of our whistleblowers have been insiders, the agency also receives critical intelligence from company outsiders, like today’s whistleblower, whose swift reporting alerted staff to the violations that resulted in the success of this enforcement action.”
“Today’s award marks a milestone for the whistleblower program,” added SEC Chairman Jay Clayton. “This whistleblower is the 100th individual to receive an award under the program since its inception, and the 33rd individual awarded so far this year. The pace and the amounts of the awards in recent years underscore the Commission’s commitment to increasing the efficiency and effectiveness of the whistleblower program. We remain dedicated to working quickly to get more money into the hands of whistleblowers, including through the improvements that will be implemented as a result of the amendments approved by the Commission last week.”
In celebration of the milestone, whistleblower attorneys Stephen M. Kohn and Mary Jane Wilmoth, of qui tam firm Kohn, Kohn & Colapinto, penned a National Law Review piece entitled “The 100 Whistleblowers Who Changed Wall Street.” The article details how the brave actions of these 100 individuals have proven both the efficacy of the SEC Whistleblower Program and the importance of whistleblowers in protecting investors and fighting corporate fraud.
According to the article, “when created ten years ago, the Dodd-Frank Act’s ‘whistleblower bounty program’ was highly controversial. Skeptics questioned the wisdom of providing monetary rewards to whistleblowers whose information resulted in the successful prosecution of fraudsters.” The first 100 SEC whistleblowers have proven these skeptics wrong. The article details that “these first 100 whistleblowers allowed the SEC to recover $2.5 billion in sanctions and returned $750 million harmed investors.” And in turn, the whistleblowers have been justly rewarded. The SEC awarded approximately $527 million to these first 100 whistleblowers.
The article highlights that it is not just whistleblowers and whistleblower advocates heralding the success of the program. In fact, the highest officials at the SEC have recently been outspoken in their praise for the program. The article quotes the laudatory comments of all five SEC Commissioners at the recent vote on rule changes to the program. For example, Commissioner Hester M. Pierce referred to the program as “an integral part of our enforcement program,” and Commissioner Elad L. Roisman claimed that “to call this program a success is an understatement.”
While the vast majority of these SEC whistleblowers have remained anonymous, protection offered under the Dodd-Frank Act, the article provides some details about the wide variety of individuals who make up these first 100 whistleblowers. Noting that the whistleblowers have come from all over the globe, have been auditors, harmed investors, or company insiders, and have reported crimes “from securities law violations that impacted retail customers to foreign bribery.”
Kohn and Wilmoth conclude their piece by stating:
In the end, the whistleblowers’ courage and sacrifice changed Wall Street. The Dodd-Frank Act whistleblower reward law has been proven a success. Similar laws covering money laundering, wildlife trafficking, and consumer financial frauds need to be passed immediately.
The first 100 Dodd-Frank Act whistleblowers proved that whistleblowing works. It is now up to Congress to ensure that similar programs are enacted into law, existing programs are enhanced, and ultimately that whistleblowers are fully protected from the corporate backlash that always comes.